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Fed: MN banks nearly past financial crisis

Minnesota banks are almost past the crisis from the financial meltdown, according to the Federal Reserve Bank of Minneapolis.

The 366 commercial banks chartered in the state generally saw an increase in profits during the first three months of this year. However, the quality of their loans also deteriorated in the first quarter. Both are typical for the first quarter.

Still, Ron Feldman, senior vice president of supervision, regulation and credit at the Minneapolis Fed says both loan quality and profits at Minnesota banks are now tracking close to historical norms.

"We're getting pretty close to the 20-year averages and medians," Feldman said. "Another way of putting it is that we're almost out of the crisis period for Minnesota as a whole. The things that really got us in trouble, we're done with some of that."

However, Feldman notes that Twin Cities banks, which did a lot more commercial real estate lending in the outer-ring suburbs, are still a long ways off from their historical trends.

Feldman said loan growth at banks chartered in the state was negative compared to the first quarter of last year. But he said the rate of decline is slowing, and for Twin Cities banks, loan growth is improving.

"For the Twin Cities' average bank, you'll see it's actually positive," he said. "This is the first time we've had a positive reading on that measure, year-over-year loan growth, I think, for three or four years."